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Steering Clear of Retirement Pitfalls: Strategies for UPS Employees

Healthcare Provider Update: Healthcare Provider for UPS: UPS is served by the UPS Health and Wellness Program, which provides a range of health benefits through various partnerships with healthcare providers and facilities aimed at supporting the well-being of its employees. Potential Healthcare Cost Increases in 2026: As 2026 approaches, healthcare costs are anticipated to surge significantly, primarily driven by the expiration of enhanced federal premium subsidies and rising medical expenses. Many states are facing projected premium increases, with some exceeding 60%. This scenario poses a daunting challenge as over 22 million Marketplace enrollees-92% of policyholders-could experience out-of-pocket premium hikes surpassing 75%. With insurers anticipating aggressive rate hikes and a landscape already strained by increased healthcare utilization, families and individuals will need to navigate these financial pressures carefully to maintain access to necessary healthcare services. Click here to learn more

'UPS employees nearing retirement should consider the 'bucket strategy' as a proactive way to help protect their retirement income from sequence of returns risk, providing a stable cash flow during market downturns while allowing their long-term investments to recover—creating a robust plan for both stability and growth.' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'UPS employees approaching retirement can benefit from diversifying their income strategy using the 'bucket strategy,' which provides for short-term needs while positioning assets for long-term growth, establishing a balanced approach to market volatility and inflation.' – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

The risks of sequence of returns and how it can impact your retirement income.
The 'bucket strategy' for managing market volatility in retirement.
How to plan for inflation to help maintain your purchasing power during retirement.

Many UPS employees nearing retirement have worked hard to save, invest, and prepare for a stable financial future. However, even the most carefully crafted retirement plans can face a hidden risk that’s often overlooked: sequence of returns risk. This risk occurs when the timing of market returns negatively impacts a retiree's ability to generate income from their portfolio.

Sequence of Returns Risk: What is it?

For anyone depending on their investments for retirement income, risk is an inevitable part of the equation. Sequence of returns risk highlights a problem that can arise even with a solid financial strategy: even if you diligently save, make smart investments, and plan your retirement, a market downturn early in retirement can hinder the recovery of your portfolio. This can lead to reduced future income, especially if you’re forced to sell investments at a loss to cover expenses.

The key factor behind this risk is that, while markets generally trend upward over time, the returns you experience early in retirement significantly influence your long-term financial health. If the market underperforms during those first few years, especially if you’re making withdrawals, your portfolio's future potential can be seriously affected.

The Significance of Timing

Many investors assume that, over time, markets will rise, and they fail to account for the immediate impact market downturns can have on retirees. When you begin withdrawing income from your retirement portfolio and the market drops, you may be forced to sell assets at a loss. This not only locks in the losses but also reduces the ability of the remaining portfolio to grow, limiting future income potential.

This issue is not just a theoretical one; real-life examples abound where retirees have struggled to meet their financial goals due to poor timing early in retirement. Negative returns early on can disrupt even well-constructed portfolios. The sustainability of early retirement income and future growth potential can be compromised by such setbacks.

The “Bucket” Strategy: A Smarter Way to Generate Income

To manage sequence of returns risk, it’s essential to design a retirement income strategy that accounts not just for how much you’ve saved, but also when you access those funds. UPS employees should consider a strategy that divides retirement assets into multiple “buckets,” each with its own function and time horizon. This approach is designed to provide a reliable income stream, regardless of market fluctuations.

Here’s how the strategy works:

Bucket 1: Stability First, Years 1–5

The goal of Bucket 1 is to provide the income you need during the early years of retirement. This bucket includes low-risk, highly liquid assets like cash reserves, certificates of deposit (CDs), short-term treasuries, or fixed annuities. The focus here is on stability, making sure that you have the cash required during this crucial period without worrying unduly about market swings.

Bucket 2: Moderate Growth with Purpose, Years 6–10

While Bucket 1 focuses on stability, Bucket 2 emphasizes moderate growth. It may include bonds, fixed annuities with income riders, and other conservative investments with a longer maturity. The strategy here is to grow these assets in a way that aligns with future income needs, offering moderate risk while preparing for the years ahead.

Bucket 3: Long-Term Growth and Volatility Management, Years 11–15

Bucket 3 is designed for long-term growth and is meant for later years of retirement. With the first two buckets covering the early years, Bucket 3 can afford to take on more volatility by investing in stocks, which, while more volatile in the short term, offer greater potential for growth. This bucket is intended to withstand market downturns and notionally has the time to recover and take advantage of long-term market trends.

Bucket 4 and Beyond: Legacy and Longevity, Years 16+

For those planning a retirement longer than 15 years, Bucket 4 focuses on long-term growth. This bucket may consist of riskier investments, designed to grow over time and support legacy goals, long-term care needs, or late-stage retirement expenses. Funds in this bucket are meant to meet financial needs that arise far down the road, whether it’s covering health care costs or providing a legacy for future generations.

The Bucket Strategy’s Benefits

This strategy works because it helps retirees reduce emotional decision-making during volatile market periods. With portions of assets already set aside for short-term income, you can rest easy knowing that even in times of market volatility, your immediate needs are covered. This optimally allows your long-term growth assets to recover, potentially eliminating the need to sell investments in a downturn.

The strategy offers not only growth potential for the later years of retirement but also frees retirees from over-relying on the market for their daily living expenses, offering peace of mind.

In Conclusion

Retirement planning isn’t just about saving enough money—it’s about making sure that savings last through your retirement years. If you are approaching retirement at UPS, now is the ideal time to explore creating a structured income plan with a fiduciary advisor. This approach can increase confidence around your financial future, potentially helping you sidestep the pitfalls of sequence of returns risk.

The strategy outlined here aims to provide comfort, reduce the stress of market swings, and help your portfolio withstand both prosperous and difficult years. UPS employees have the opportunity to work with trusted professionals to create well-thought-out retirement plans that support their financial futures while providing a reliable income throughout retirement.

One of the most common mistakes retirees make immediately after retirement is underestimating the importance of adjusting their withdrawal strategy for inflation. A 2023 study by Fidelity Investments shows that retirees who neglect inflation may experience a decline in purchasing power as they age. It’s essential to include inflation-adjusted solutions in your retirement plan to preserve your purchasing power, even with small inflationary increases over time. By planning for this, you can better maintain your quality of life despite rising costs.

Explore how a structured income plan can help manage your retirement funds from the sequence of returns risk. Examine the 'bucket strategy' for managing retirement income, which balances stability, growth, and long-term objectives. Create a plan that shields against market downturns and provides consistent income, supporting your financial future. Learn essential techniques for managing risk and increasing returns in retirement. Optimize your retirement income with careful planning and low-risk investments. Use professional retirement strategies for long-term confidence.

Retirement is like preparing for a long road trip. You've packed your bags, checked your vehicle, and mapped out your route. But one of the biggest mistakes retirees make is neglecting to adjust their spending plans for the rising costs they will face over time. Ignoring inflation can gradually reduce your purchasing power, much like running out of fuel during a trip can derail your plans. By planning for inflation, you can avoid the financial bumps along the way.

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Sources:

2. 'Why Keeping Growth in Your Portfolio After 70 Is Crucial for Your Financial Health.' Investopedia , 2 June 2025.

2. 'Why Keeping Growth in Your Portfolio After 70 Is Crucial for Your Financial Health.' Investopedia , 2 June 2025.
- 3. Sloan, Jim. 'I'm a Wealth Manager: This Is How to Reduce One of the Biggest Risks to Your Retirement.' Kiplinger , 1 June 2025.
  - 4. 'Inflation Is Weighing Heavily on Retirees.' Investopedia , 3 June 2025.
    - 5. 'What Millennials Should Do to Combat the Fear of Running Out of Money.' Investopedia , 2 June 2025.

How can employees take full advantage of the retirement benefits offered by UPS, including the pension plan enhancements implemented in 2024, and what specific eligibility criteria must they meet to secure these benefits? In your experience, how have changes in the UPS pension plan over the years, especially the recent increases to service pension benefits, impacted the financial planning of UPS employees nearing retirement?

To fully take advantage of the UPS retirement benefits, including the pension plan enhancements implemented in 2024, employees must meet specific eligibility criteria, such as length of service and retirement age, which are outlined in the company's pension plan documents. Recent increases in service pension benefits, particularly for employees nearing retirement, have allowed UPS workers to better secure their financial future, giving them a more stable foundation as they transition out of the workforce. These changes have made financial planning more predictable for those close to retirement.

What are the steps that part-time employees at UPS need to follow to transition to full-time status, and how does this transition affect their eligibility for the UPS Pension Plan? Additionally, can you outline how the accrual of Credited Service works for both part-time and full-time UPS employees under the current plan rules?

Part-time employees at UPS must follow an established process to transition to full-time status, often based on seniority, availability, and performance reviews. Once they transition to full-time, their eligibility for the UPS Pension Plan improves, allowing for faster accrual of service credits. Accrual of Credited Service for part-time employees is typically prorated based on the hours worked, while full-time employees accumulate service credits more quickly, based on a 40-hour workweek under the current plan rules.

Considering the rise in healthcare costs, what healthcare options are available to UPS employees upon retirement, and how do the TeamCare plans differ between full-time and part-time retirees? How does the retiree medical coverage through TeamCare ensure that UPS employees maintain health insurance access without significant financial burden after retirement?

UPS offers comprehensive healthcare options through TeamCare for retirees, which vary for full-time and part-time employees. Full-time retirees generally receive more extensive coverage, while part-time retirees may have more limited options. TeamCare ensures that UPS retirees have access to affordable healthcare coverage post-retirement by providing plans designed to reduce the financial burden of rising healthcare costs, helping retirees maintain health insurance with manageable out-of-pocket expenses.

How does the UPS pension plan accommodate employees who have worked in multiple states or for different employers within the Teamsters system? What provisions are in place to ensure that their service credits are recognized and valued, particularly for those who may approach retirement age with a patchwork of employment history?

The UPS pension plan accommodates employees who have worked in multiple states or for different employers within the Teamsters system by recognizing their service credits across various jurisdictions. This ensures that even employees with patchwork employment histories can count their service toward pension eligibility, helping them qualify for retirement benefits despite moving between employers or locations within the Teamsters network.

What specific provisions exist for retirees at UPS who may choose to return to part-time employment post-retirement? Can you detail how this affects their pension benefits and any other retirement-related income they might receive, alongside UPS's policies regarding reemployment for retirees?

UPS retirees who choose to return to part-time work after retirement can do so under certain conditions without affecting their pension benefits. However, there may be limits on how much they can work without reducing their pension income. UPS’s policies on reemployment allow retirees to maintain some of their retirement-related income while taking on part-time roles, ensuring financial stability alongside continued employment.

How can employees at UPS navigate the process of filing a grievance if they feel their retirement benefits have not been administered fairly? What are the resources available to them, and how does the grievance procedure relate to the overall benefits they receive under the UPS pension and welfare plans?

If employees feel their retirement benefits have been unfairly administered, they can file a grievance through the UPS grievance procedure. This process often begins with discussions between the employee and management, with the option to escalate the issue to the union for formal dispute resolution. Resources such as union representatives and detailed plan documents are available to help employees navigate these disputes under the UPS pension and welfare plans.

With the introduction of new benefit contribution rates in 2024, how do these changes reflect UPS's commitment to its employees' financial futures? In what ways are employees encouraged to participate in decision-making regarding their benefits, and how might this shift impact employee satisfaction and retention rates at UPS?

The new benefit contribution rates introduced by UPS in 2024 reflect the company’s commitment to securing the financial futures of its employees. These changes encourage employees to be more engaged in the decision-making process regarding their benefits, which can lead to greater satisfaction and retention. UPS fosters this involvement by providing clear communication about how benefits are structured and how employees can contribute to their long-term financial health.

For employees looking to enhance their retirement savings beyond the UPS Pension Plan, what additional options are available, such as 401(k) or health savings accounts, and how do these integrate with the retirement benefits provided by UPS? Additionally, how can employees get the most out of these supplemental plans during their working years at UPS?

Beyond the UPS Pension Plan, employees have additional retirement savings options, such as 401(k) plans and health savings accounts (HSAs). These plans complement the pension benefits and allow employees to further enhance their retirement savings during their working years. UPS offers matching contributions for the 401(k), and employees are encouraged to maximize these plans to ensure robust retirement savings.

How does UPS support employees facing long-term disabilities in relation to their pension plans and health care coverage? Can you explain the interaction between long-term disability benefits and retirement benefits, particularly for employees who may leave the workforce earlier than anticipated due to health issues?

For employees facing long-term disabilities, UPS provides both long-term disability benefits and continued healthcare coverage, which are integrated with their pension plans. Employees who leave the workforce early due to health issues can rely on these benefits to maintain financial stability, as the long-term disability benefits help bridge the gap until they reach retirement age and are eligible for pension payments.

For employees seeking more information on their retirement benefits and options available through UPS, what channels are best for contacting the benefits department? Are there specific representatives dedicated to assisting employees with retirement questions to ensure they understand the nuances of their benefits effectively?

UPS employees seeking more information about their retirement benefits can contact the benefits department through designated channels, such as the employee portal or direct phone lines. UPS also provides representatives who specialize in retirement benefits, ensuring employees receive personalized guidance to understand the nuances of their pension plans and other retirement options effectively.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

UPS offers both a traditional defined benefit pension plan and a defined contribution 401(k) plan. The defined benefit plan includes a cash balance component, where benefits grow based on years of service and compensation, with interest credits added annually. The 401(k) plan offers company matching contributions and various investment options such as target-date funds and mutual funds. UPS also provides financial planning resources and tools to help employees manage their retirement savings.

UPS offers RSUs that vest over time, giving employees shares upon meeting vesting conditions. Stock options are also provided, allowing employees to purchase shares at a fixed price.